Q2 2026 First Internet Bancorp Earnings Call Transcript
Key Points
- Total revenue grew 23% year over year, with pre-provision net revenue up 28% and EPS of $0.27, significantly higher than the prior-year period.
- Credit quality improved markedly: provision for credit losses declined to $13.4 million from $16.3 million in Q1, and SBA net charge-offs fell nearly 50% sequentially.
- Non-performing loans declined for the second consecutive quarter, down 19% from year-end, and total delinquencies dropped 26% from Q1 to $29.1 million.
- Net interest margin expanded to 2.39% (2.47% FTE), up over 40 basis points year over year, driven by lower deposit costs and a strong CD repricing tailwind.
- Fintech partnerships are scaling rapidly: payments volume and fee revenue grew 256% and 222% year over year, respectively, with the expanded jaris relationship expected to boost net interest income.
- Management raised the non-interest income outlook to $40.5-$41 million and lowered non-interest expense guidance to $106-$107 million, reflecting improved operating leverage.
- Net charge-offs remained elevated at $16.9 million, up modestly from the prior quarter, with franchise finance charge-offs of $11.6 million, though partially covered by specific reserves.
- Average loan balances declined about 1% sequentially due to elevated pay-offs and lighter SBA originations, leading to higher cash balances that tempered margin expansion.
- Full-year loan growth guidance was revised down to 4%-6% from prior expectations, reflecting early pay-offs and lower retention of guaranteed SBA balances.
- The company remains liability-sensitive, with a potential 25 basis point rate hike expected to reduce net interest income by approximately $2.4 million annually.
- Provision for credit losses is still high at $47-$48 million for the full year, indicating ongoing credit costs despite improving trends.
- Franchise finance loans 90 days past due increased during the quarter, as certain loans work through the resolution process, adding uncertainty to credit outcomes.
Thank you for standing by. My name is Trevor. I will be your conference operator today.
At this time, I would like to welcome everyone to the First Internet Bancorp earnings conference call for the second-quarter 2026.
(Operator Instructions) Please note that this event is being recorded.
It is now my pleasure to turn the call over to Julia Ferrara from ICR. You may begin your conference.
Thank you, operator. Hello, everyone. Thank you for joining us to discuss First Internet Bancorp's second-quarter 2026 financial results.
The company issued its earnings press release earlier this afternoon. It is available on the company's website at www.firstinternetbancorp.com.
In addition, the company has included a slide presentation that you can refer to during the call. You can also access these slides on the website.
Joining us from the management team today are Chairman and CEO, David Becker
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